Rates will rise but burden will be redistributed

SOUTH Gippsland Shire Council has endorsed a Proposed Budget for 2014-2015 and is inviting public feedback before May 28. At the same time, Council has endorsed a Proposed Rating Strategy 2014-2018. It took this strategy, said by Mayor Jim Fawcett to provide for “a quite remarkable change in the way the budget is framed”, into account during the preparation of the Budget and Long Term Financial Plan. Submissions are invited from the public for the Rating Strategy, too.

The budget sets out an average increase in rates and charges of 4.13 per cent – or 5.5 per cent for rates alone (thanks to a 16 per cent reduction in waste service charges). Operating expenditure (including depreciation) for the 2014-2015 financial year will be $56.31 million, capital expenditure $14.04 million, total debt redemption $0.51 million, total cash outflows $60 million and inflows $60.52 million, with cash at the end of the financial year $9.6 million. The rates and charges income is budgeted at $35.56 million.

The rating strategy was developed with community input via a steering committee whose membership included community representatives as well as councillors. Included among its 19 recommendations are: that the basis of valuation for rating purposes continues to be Capital Improved Value; that Council continues to apply differentials as its rating system; that ‘user benefit’ principle is given relatively low weighting and consideration when setting differential rates; that the Municipal Charge be phased out over two years (from 20 per cent to 10 per cent to 0 per cent); that the Residential category differential rate be set at 100 per cent, the Industrial and Commercial categories’ differentials rise over two years through 102.5 per cent to 105 per cent, Vacant Land (currently at 150 per cent, with Restricted Vacant Land at 100 per cent) move to 175 per cent, rising to 200 per cent in another year.

All through the development of the Rating Strategy, which has involved a lengthy public consultation process, including written and oral presentations to Council, the fiercest lobbying has come from the farming sector, which has argued that the current differential of 90 per cent for the Farming category is untenable. The proposed Strategy winds back the differential over two years, through 80 per cent to 70 per cent. Even that is not enough for some.

“I agree with all the principles in the document, but farmers get only a very small, almost insignificant reduction…We should be embarrassed by what we offer farmers,” said Cr Don Hill, who is a farmer. “Here is an opportunity to come up with a policy that shares out the rate burden equitably,” he said, arguing for increasing the rate differential on vacant land and reducing it even further for farming with the aim of encouraging people to farm.

Cr Jim Fawcett, an accountant, claimed the strategy provides farmers with one of the lowest differential rates of any shire. He cautioned against increasing the differential in the Vacant Land category too much. “You can only milk the cow so often!”

Cr Hill would not be persuaded, however, and voted against the Proposed Rating Strategy, along with Cr Nigel Hutchinson-Brooks and Cr Andrew McEwen. With councillors Bob Newton and Kieran Kennedy absent, the Rating Strategy got through with the votes of Cr Fawcett and Crs Mohya Davies, Jeannette Harding and Lorraine Brunt. Only Cr McEwen voted against the Budget.

Cr McEwen felt so strongly he penned a letter to the local press, claiming that farmers hadn’t been given a fair go and calling for Council to reduce its management costs.

He says, in part: “On the surface there appears to be a significant reduction in farm rates by the reduction of differential rates from 90% to 70% for farmers. However, after the impact of the removal municipal charge, farms’ rates will fall by only 1.38%, a minuscule amount.” [see Mirror page 15]

Cr Lorraine Brunt expressed a more even-handed viewpoint, saying: “Everyone thinks they’re paying too much in rates. There are no winners.”

Cr Fawcett, however, said that there were “many winners and some losers” and that around 59 per cent of South Gippsland’s rate base would see a decrease in their rates. “Many high value properties will see a significant increase,” he said.

He urged ratepayers to look at the Proposed Rating Strategy and the Proposed Budget, which he described as “reasonable,” and take the opportunity to comment if they felt strongly enough.

Council will write to every ratepayer advising that the Rating Strategy has been prepared and may affect them and they are welcome to pass comment. Both proposed strategies can be viewed at council offices or libraries or online at the shire website. Written submissions from the community on the endorsed plans are invited before May 28. Public submissions will be heard, considered and determined at a Special Meeting of Council on June 11, with a view to adopting the final documents at a council meeting on June 25.

The Conversation
The Conversation is a not-for-profit educational website, whose editors work with academics and researchers to publish evidence-based articles that are free to read and republish. Each month, The Conversation reaches a global audience of 5.2 million users